My staple reading matter is business books and publications such as Harvard Business Review. I mostly read these on planes while traveling. When I come across a thought provoking book, I like sharing it with my clients. Here is my summary of this entertaining bestseller.
In this book, Whole Foods Market co-founder John Mackey and professor and Conscious Capitalism, Inc. co-founder Raj Sisodia argue for the inherent good of both business and capitalism. Featuring some of today’s best-known companies, they illustrate how these two forces can—and do—work most powerfully to create value for all stakeholders: including customers, employees, suppliers, investors, society, and the environment.
In a nutshell, this is what the writers say:
Conscious Capitalism asks business leaders and entrepreneurs to define their purpose and the purpose of the organization, build a stakeholder map describing how value is added for each stakeholder, faster conscious leadership and a conscious culture for their organization. The four tenets of Conscious Capitalism are :-
- The critical nature of Purpose
- How conscious businesses think about each major and secondary stakeholder and the leverage of independent relationships among stakeholders
- Conscious Leadership
- Conscious culture and management
The contention is that Capitalism is still the best economic model but is still misunderstood and not sufficiently well managed. The writers suggest that Capitalism is under attack for several reasons :-
- It needs a new narrative and ethical foundation that accurately reflects its virtue.
- Too many businesses have not identified their true purpose and overall impact.
- An excessive focus on optimizing profitability.
- The growth of governments have expanded rapidly restricting competition in favour of politically connected businesses.
Many businesses operate with a low level of consciousness of their true purpose. This often results in profit maximization and all participants / stakeholders treated as a means to an end. “We believe Capitalistic business is good because it creates value, is ethical based on voluntary exchange which elevates our existence and lifts people out of poverty.”
Business has a much more positive impact when based on a higher purpose that transcends just generating profits and creating shareholder value. Purpose is the reason a company exists. A higher purpose creates engagement among all stakeholders and causes creativity, innovation and commitment. And businesses need to become and remain profitable so they can achieve both their purpose and higher purpose. Critical that all stakeholders, particularly employees, receive a meaningful contribution but the business must remain profitable to ensure continuity and financial security. It is also essential that as part of its purpose businesses create core values to protect its culture.
Higher purpose addresses key questions such as :-
– Why do we exist and need to exist ?
– What is the greater contribution we wish to make?
– Why is it a better place to live because of our contribution ?
– Would we be missed ?
It is also the driving force which holds the organization together. It is the magnet which attracts the right employees and stakeholders to the business and helps create strategic alignment.
Vision is an imaginative conception of what we create if we fulfill our purpose.
Mission is the core strategies to be undertaken to fulfill the Purpose.
Purpose refers to the difference we are endeavoring to achieve.
Victor Frankl taught that people can discover meaning and purpose in their lives by doing work that matters, by loving others unconditionally and by finding meaning in suffering.
Profits are essential but they are the consequence of every facet of an organization.
Four categories of higher purpose :-
– Good – Service to others including quality of life.
– True – Human knowledge.
– Beautiful – Excellence and beauty creation.
– Heroic – Courage to help change / improve our world.
Conscious businesses satisfy the needs of all their major stakeholders with profit as a consequence not the primary obsession. The major difference between a traditional business and a conscious business is that traditional managers make trade-offs among stakeholders particularly in favour of investor stakeholders. Conscious businesses look for synergies across shareholder groups i.e. to create WIN / WIN situations for all stakeholders. An ethical system based on value creation for all stakeholders.
The key element of business is to create and retain customers. Most businesses rank either customers or employees first. This definitely means the other group is secondary. Take care of your employees and they’ll take care of the customers. And satisfied customers make employees happier, a perfect cycle.
Good Marketing is an enhancement of our relationship with customers and Bad Marketing anything that detracts. We should aim to create customers as advocates by putting their interest first. The value of strengthening the relationship and building trust outweighs the cost of occasionally missing a transaction.
Most employees on the other hand want to work for more than just a salary. They are searching for meaning and want work that is stimulating and enjoyable. That work can operate at 3 levels: a job – hours for pay; a career – opportunity to grow and excel; a calling – meaningful work that inspires us.
And do not overlook Investors. Without such funding businesses are unable to achieve their full potential. Investors are entitled to a return as do banks who earn interest. The Investor community is not adequately credited / respected for the contribution they make.
We also need and should seek collaborative, innovative suppliers. They are often the most neglected of the major stakeholders.
Leadership is mostly about change and transformation.
Management is about efficiency and implementation.
Leaders are motivated by the higher purpose and understand the interdependence of people and the impact it has on the culture of the organization. Conscious leaders find joy in their work, keen to serve, lead and shape the future. They are authentic and eager to share their passion. They also display analytical, emotional and spiritual intelligence and embody servant leadership, high integrity and they care for people. They also totally understand themselves and their effect on other personality styles – fundamental EQ.
Conscious leaders also poses SQ or Spiritual Intelligence – where they access meaning, purpose and high motivations. Conscious leaders make a positive impact on their environment through their influence on their organization. They are dedicated to helping people evolve and have great capacity to make tough choices / decisions with tough and moral clarity and consistency.
To achieve all the above, leaders must be committed to learn and grow in all facets of business, life and people. Mentors or Coaches are a great attribute.
Culture is a powerful but invisible force which we must manage consciously.
Culture is behaviour and is cyclical – It is causal to the organization and is impacted by everything that happens in the business. Shaping the culture behaviour is one of the leader’s most important roles and ensuring that management and employees believe in and embody the agreed behaviour and values of the organization.
Fidelity to the Purpose and Core Values builds trust while deviations undermine it. Trust is mutual – in order to be trusted we must imbue Trust.
A culture of collaboration is crucial to enable effective and Conscious Management. To be successful requires 3 critical aspects:-
- Hire the right people whose personal beliefs align with the corporate purpose
- Put people in the right roles to optimize strength, and give them autonomy to operate and
- Create opportunities for people to flourish while assisting the organization to fulfil its purpose
BECOMING A CONSCIOUS BUSINESS
Leaders need to create a sense of urgency to change the culture from inertia and complacency to the conscious business model. It requires a fundamental and philosophical realignment.
The four tenets outlined must resonate intellectually, emotionally and spiritually with Leadership and their team. A team effort but effectively led and managed. Business is fundamentally about people working together cooperatively to create value for others. It is a great creator of adding value.
And of course, the business needs to be fully conscious and cognizant of its inherent higher purpose.
Do I recommend this book? Absolutely, yes.